When Wynn Las Vegas opens its well-guarded doors next month, Las Vegas’s first new resort in five years is likely to set off a rivalry between casinos catering to elite high rollers.
Wynn Resorts Ltd.’s new $2.7 billion glass-sheathed resort -- already a television commercial staple -- is gaming impresario Steve Wynn’s effort to top the opulence of his previous works, like the Bellagio casino now owned by MGM Mirage.
“On the high end, there will be a lot more competition for gaming revenues,” said Marc Falcone, an analyst at Deutsche Bank Securities. Last year, gambling revenue in Las Vegas totaled $10.5 billion.
The new Wynn casino hotel, located at the north end of the Las Vegas Strip, will boast 2,700 hotel rooms, 19 restaurants, luxury retailers including a Maserati dealership, a golf course and other amenities, but design details have been kept quiet.
Only Wynn himself can talk on the record about the project, and he won’t do so until after the opening on April 28, a spokeswoman for Wynn Resorts said.
Local news reports have quoted Wynn as saying that the casino will be suffused with natural light -- a rare commodity in the smoke-filled gambling warrens of Las Vegas.
“One always expects something new and different from Mr. Wynn and I’m sure we won’t be disappointed,” said Robert Stewart, a spokesman for Caesars Entertainment Inc. , which is being acquired by Harrah’s Entertainment Inc.
Gary Loveman, chief executive of Harrah’s, said Wynn will have a favorable impact on Harrah’s properties because it will attract new tourists to Las Vegas, but the impact on Caesars’ extremely high-end business is less certain.
“We will make sure to sustain the Caesars brand,” he said.
MGM Mirage seen facing biggest threat
Loveman’s view that Wynn’s new casino will draw visitors to Las Vegas is widely shared, but there is one market that has little room to grow -- the very highest rollers, known as ”whales,” who make wagers in the tens of thousands of dollars, often on baccarat.
That is a market that MGM Mirage has dominated.
Falcone estimated that 15 percent to 20 percent of MGM’s high-end business will migrate to the new Wynn casino.
“It’s a zero-sum game,” the analyst said. “Baccarat is $400 to $500 million a year; it’s difficult to grow.” Baccarat is a card game in which gamblers want to hold cards totaling nine.
MGM, which is acquiring Mandalay Resort Group , says it is not worried about more competition for high rollers. “As new product enters the market, everyone does well ... Wynn will draw new visitors and there is a fairly good chance some of them will come over to us,” said MGM spokesman Alan Feldman.
“We believe the opening of Wynn Las Vegas ... poses a risk to MGM’s Strip properties earnings,” Calyon Securities analyst Maria Rickert said in a report. She estimated that the Bellagio, the Mirage and the MGM Grand capture 60 percent of the high-end Strip gaming market and many employees at casinos once owned by Wynn have likely followed him to the new resort.
Feldman said about 10 percent of MGM’s overall gaming revenue comes from high-rollers.
MGM has exercised “good discipline” in refraining from writing off gamblers losses, Falcone said, but the “the No. 1 concern for MGM Mirage” is whether competition with Wynn will change that. “We are going to watch carefully whether there is any discounting of losses,” he said.
In order to keep the big bets coming, casinos have been known to offer to write off, or “discount,” some losses.
Caesars, owner of Caesars Palace and Paris Las Vegas, has ”a large number of loyal, high-end customers ... We are not going to embark on any wild discount campaigns,” Stewart said.
